If The Beatles were a publicly traded company and you could have purchased shares when their first album was released in 1963 can you imagine what they would be worth today? In a similar fashion many people purchase shares of brand new, small and virtually unknown companies with dreams they become the next Microsoft or IBM. While finding that hidden gem would be exciting and very profitable, the chances of getting lucky are very slim. Although the odds are not in your favor when investing in small and unknown stocks a new service is available that allows you to invest in unsigned bands and profit as they become successful.
SellaBand.com is a new company that allows you to do just that. You can search through a large selection of unheard of and unsigned bands by genre, read about them and listen to sample tracks to find which artists you think would potentially be a good investment. The process is quite simple:
- Browse the listings and find artists that could be good investments.
- Each artist on the site issues 5,000 parts (just like shares of stock). Each part costs only $10.
- You purchase as many parts of the artist as you want.
- When the artist has sold all parts (raised a total of $50,000) they go to the studio to record an album.
- You receive a copy of this CD in the mail once it is completed.
- The music is released for download on SellaBand.com and advertising revenues generated from this are split among the artist, SellaBand and the “shareholders”.
- A regular version of the CD will then be sold through online partners and at gigs by the artist. The artist will receive 50% of the net profits of these sales. The rest will be equally divided between you and the other investors.
This is a very new concept and has only been in operation since August, 2006 but it is quickly gaining traction. Clearly it is too early to tell what will happen and how well this model works but it is an interesting business model that has the potential to become something big. One of the neat things about it is that each band has a fixed number of shares available. Unlike public company stock that can have billions of shares each artist only gets 5,000. And with one share only costing $10 you can obtain a sizable position for very little money.
Of course this is no supplement for true investments but if you are into music and new concepts it could be worth exploring. It probably won’t make you rich but you may find some new music to listen to. Even if they don’t make it big you may still end up getting a CD out of the deal, and $10 for a CD these days is quite cheap.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.